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Article
Publication date: 1 February 1999

Shiraz Mahmood

This paper considers the recent evolution of the British regulatory system and discusses what, in the author's opinion, may become some of the challenges that face regulators…

109

Abstract

This paper considers the recent evolution of the British regulatory system and discusses what, in the author's opinion, may become some of the challenges that face regulators, thus ultimately affecting the effectiveness of investor protection, as we move into a new millennium. However before examining the aforementioned matters it is worth considering the bases for investor protection and how it benefits financial markets.

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Journal of Financial Crime, vol. 6 no. 4
Type: Research Article
ISSN: 1359-0790

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Publication date: 1 March 1995

Shiraz Mahmood

Since the collapse of the Bank of Credit and Commerce International (BCCI) there has been a plethora of BCCI related litigation. This article considers the latest developments in…

145

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Since the collapse of the Bank of Credit and Commerce International (BCCI) there has been a plethora of BCCI related litigation. This article considers the latest developments in the BCCI saga while focusing on the current state of litigation in both the UK and the USA. It appears that creditors of BCCI will finally be receiving some of their money which was lost as a result of the closure of BCCI on 5th July, 1991. A compensation package requiring the approval of courts in England, the Cayman Islands and Luxembourg, the three jurisdictions where BCCI headquarters operated from has finally received the requisite approval (the High Court approved the compensation scheme on 19th December, 1994; a Cayman Islands' court gave its approval on 13th January, 1995; a Luxembourg court approved the package on 31st January, 1995). Under the scheme BCCI's majority shareholders, the Government and ruling family of Abu Dhabi, must pay $1.8bn towards a global settlement fund over a period of three years. The courts' decision states that Abu Dhabi will be subject to the same terms as other creditors and will not be absolved from any future legal action brought by creditors as a result of the present compensation agreement. The initial payment of $1.55bn is calculated to reimburse some 250,000 creditors with payments equal to 20 per cent of their losses by this summer, however, such estimates are subject to a separate agreement worth $425m between BCCI's liquidators and the National Commercial Bank of Saudi Arabia which will not be decided upon by Luxembourg courts until 14th March at the earliest; if this deal is delayed the first payment could drop to 15 per cent. It is anticipated that the final dividend that creditors can expect to receive will be between 20 and 40 per cent, however, this is far from guaranteed due to on‐going litigation and problems in assessing the total number of creditors' claims.

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Journal of Financial Crime, vol. 3 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 February 1995

Shiraz Mahmood

Supervision of banks in the UK is conducted by the Bank of England. The Bank which was created by Royal Charter in 1697 was nationalised by the Bank of England Act 1946. This Act…

152

Abstract

Supervision of banks in the UK is conducted by the Bank of England. The Bank which was created by Royal Charter in 1697 was nationalised by the Bank of England Act 1946. This Act gave the Treasury the power to require the Bank to act in the ‘national interest’, however, this power has never been utilised and the Bank has retained a high degree of autonomy from the Government, thus enabling the Bank to apply a laissez‐faire approach to the supervision of banks. Traditionally the Bank has never favoured a heavy‐handed approach to regulation, but has relied upon the use of moral suasion in its capacity as lender of last resort. The Bank's supervisory philosophy has been summed up thus:

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Journal of Financial Crime, vol. 3 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 February 1995

Shiraz Mahmood

The failure of Barings Brothers occurred because Mr Nicholas W. Leeson conducted trading which at one point extended Barings' positions on Nikkei 225 futures contracts to a total…

290

Abstract

The failure of Barings Brothers occurred because Mr Nicholas W. Leeson conducted trading which at one point extended Barings' positions on Nikkei 225 futures contracts to a total nominal value of £27bn. When Mr Leeson's strategy proved wrong Barings was unable to support these positions and collapsed. Mr Leeson's authorised activity was arbitrage. He was supposed to exploit marginal differences between the prices of stocks and bonds on the Tokyo and Osaka markets by simultaneously buying on one exchange and selling on the other. The arbitrage carried out by Mr Leeson was largely on futures contracts for the Nikkei index of the 225 leading stocks in the Tokyo Market. Apparently Mr Leeson abandoned his authorised activity of arbitrage, which is a low risk form of trading, towards the end of January and starting taking part in transactions known as straddles. A straddle is effectively a bet that a market will not rise or fall outside a certain range. Mr Leeson bet that Nikkei prices would remain within the 18,500–19,500 range and sold an equal number of ‘puts’ and ‘calls’. A seller of calls is speculating that the market will fall, while a seller of puts is speculating that the market will rise; if the market rises sharply the seller loses money on the calls, if the market falls sharply, as it did in Mr Leeson's case, the seller loses money on the puts. A straddle is only profitable if market prices remain within a specified narrow range.

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Journal of Financial Crime, vol. 3 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 January 1996

Simon P. Robert‐Tissott

Gone are the days when a bank could concentrate on providing a reliable service to its customer, and maintain that as part of that service it could guard the confidentiality of…

81

Abstract

Gone are the days when a bank could concentrate on providing a reliable service to its customer, and maintain that as part of that service it could guard the confidentiality of all information learnt in the course of the customer's banking. Formerly, a customer could be relatively confident that information about his or her business affairs would not be disclosed save in fairly limited circumstances, and the bank would not trouble itself as to how these affairs were conducted. Current legislation and regulation requires a bank to be aware of the commercial background to its clients' dealings and, in certain circumstances, to take steps to report criminal conduct or to account to third parties.

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Journal of Financial Crime, vol. 3 no. 3
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 February 1996

Richard Harwood

Enforcement of regulatory controls has traditionally been left to the criminal law. In the last 15 years there has been an increasing interest in using civil remedies for this…

94

Abstract

Enforcement of regulatory controls has traditionally been left to the criminal law. In the last 15 years there has been an increasing interest in using civil remedies for this purpose. Most of the attention has been on financial services, but there have been recent developments in the UK planning system, which provide interesting parallels.

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Journal of Financial Crime, vol. 3 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 March 1997

B. Shrinath

Information is power — so it has been said — and nowhere has this statement been realised more significantly than in the banking industry. IT and banking in the 1990s and going…

344

Abstract

Information is power — so it has been said — and nowhere has this statement been realised more significantly than in the banking industry. IT and banking in the 1990s and going forward to the next millennium are tightly bonded. It is now more difficult to determine whether business drives technology or the other way round. Given this scenario, one of the most important facets of managing IT in a bank is that of information security.

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Journal of Financial Crime, vol. 5 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 March 1996

Sandeep Savla

Section 2 of the Criminal Justice Act 1987 abrogates the right to silence since a suspect is required to answer questions in pre‐trial investigations by the SFO, although the…

71

Abstract

Section 2 of the Criminal Justice Act 1987 abrogates the right to silence since a suspect is required to answer questions in pre‐trial investigations by the SFO, although the answers are inadmissible as evidence unless proceedings are brought under s. 2(14) for giving false information or by s. 2(8), where the individual ‘makes a statement inconsistent with it’. In a previous article, the writer has considered the necessity and effectiveness of s. 2 powers. It is also instructive to analyse the conceptual basis of s. 2 powers since this will aid in the interpretation of statutory ambiguities and will allow the courts to have a uniformity of approach when seeking to resolve the statutory ambiguities. The conceptual basis is also important as concerns the resolution of where the line lies between the effective investigation of offences pursuant to s. 2 and the rights of the individual subject to such questioning. A critical examination of the above issues demands steering a careful course between normative rules and theory: in this area above all others it is impossible and undesirable to divorce one from the other.

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Journal of Financial Crime, vol. 4 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 January 1998

Peter Maynard

The short answer is no. Notable examples of anti‐corruption laws are available. But there is probably no single example that one would elevate to a definitive universal model…

460

Abstract

The short answer is no. Notable examples of anti‐corruption laws are available. But there is probably no single example that one would elevate to a definitive universal model. This short briefing will focus first on the multilateral efforts of the Organization of the American States (OAS) against corruption and secondly, on the new anti money‐laundering legislation of the Bahamas with references to other major countries, as another perspective apart from the perspectives of other regions.

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Journal of Financial Crime, vol. 5 no. 3
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 April 1997

Morten Eriksen and Tarjei Thorkildsen

In most jurisdictions a suspect has the right to remain silent during criminal proceedings and he cannot be penalised for making false statements. This is loosely known as the…

77

Abstract

In most jurisdictions a suspect has the right to remain silent during criminal proceedings and he cannot be penalised for making false statements. This is loosely known as the ‘ban on self incrimination’ and is regarded as an important factor in due process protection of individuals subject to criminal proceedings. The right to silence applies only to the stage of criminal proceedings, and up to date it has surprisingly not been seriously debated. A criminal may have caused individuals and society major loss, damage or suffering; in principle one would expect that he would be obliged to assist in the clearing‐up of the case, particularly if this could ameliorate or repair the negative consequences of the crime. But this is not the way it is looked at. The suspect is under pressure, and must not be faced with the choice of lying or confessing.

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Journal of Financial Crime, vol. 5 no. 2
Type: Research Article
ISSN: 1359-0790

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